Berkshire Hathaway has recently divested nearly $1 billion worth of Snowflake stock as it exits its position in the former IPO chart-topping cloud data warehousing and analytics specialist.
According to a recent filing with the US Securities and Exchange Commission, the investment company led by renowned investor Warren Buffett no longer holds any shares in Snowflake. Berkshire Hathaway had owned approximately $990 million in Snowflake stock in the first quarter of 2024 when the company achieved a post-IPO valuation of $120 billion.
After the news of Berkshire Hathaway’s sell-off broke, Snowflake’s share price initially dropped but has since rebounded. The stock started the year strong, reaching $235 in February, but has since fallen to around $127.
Berkshire Hathaway did not provide a reason for its decision to offload Snowflake stock nor for reducing its holdings in Apple stock. However, the move could be attributed to Snowflake’s turbulent performance over the past year.
In late February, Snowflake disappointed analysts with its financial results for Q4 of 2024, despite reporting $774.7 million in revenue, marking a 32 percent annual growth.
Following the news, the company’s shares plummeted by 24 percent. Additionally, CEO Frank Slootman, who guided the company through its IPO, stepped down, with Sridhar Ramaswamy taking over, having previously served as Snowflake’s senior VP of AI and a former Google senior vice president.
In the first quarter of its 2025 financial year, Snowflake reported revenue of $828.7 million, a third higher than the same period the previous year.
However, the company encountered further challenges when Mandiant disclosed that cybercriminals had stolen a substantial volume of records from Snowflake’s customer database.
As a result, a growing number of customers, including AT&T, are believed to have been affected. Reports suggest that around 165 companies have had their internal data breached from their individual Snowflake online database storage.
Long-term issues for Snowflake revolve around its pricing model. Despite leading in operational ease, Gartner highlighted ongoing challenges in predicting Snowflake spending. Some clients are seeking assistance from financial operations (FinOps) vendors, an area where Snowflake has partnered.
Reports indicate some users struggling to comprehend and forecast their Snowflake charges, underscoring the need for optimization. Additionally, high-profile client Instacart revealed a substantial decrease in payments to Snowflake due to optimization efforts, raising questions about revenue growth and margins for the company. These factors may have influenced Berkshire Hathaway’s decision to divest from Snowflake.
The Register has noted instances where Snowflake users face cost-related challenges, indicating a potential concern for the vendor’s financial outlook. As the company navigates through its operational and security hurdles, closely monitoring its revenue growth and profitability will be crucial for stakeholders.
